The Muhammadu Buhari administration is scheming to grant special but illegal concession to an American power distribution company for the rehabilitation of high-voltage transmission lines across the country, in a deal that could breach the country’s extant procurement provisions, PREMIUM TIMES can report.
This newspaper has obtained documents showing how bureaucrats and politicians are strategising to award the $800 million contract to CTC Global, an electric utility firm based in California.
Should the administration proceed with the contract in the manner being planned, the award would make an absolute mockery of the administration’s platitudes about fighting corruption, some administration insiders told PREMIUM TIMES.
Already, Abubakar Atiku, the managing director of Transmission Company of Nigeria, has forwarded a recommendation letter for the award of the contract to CTC Global to Tunde Fashola, the minister of works, power and housing.
After making effusive case for a blanket adoption of CTC Global, without any competitive bidding, Mr. Atiku urged the minister to “accept the initial proposal” and “provide” a contract letter to the firm.
In the letter, dated November 18, 2016, Mr. Atiku said the deal would see Nigeria’s existing 330KV and 132 KV power transmission cables upgraded from the current Aluminium Conductor Steel Reinforced (ACSRs) types to Aluminium Conductor Composite Core Conductors (ACCC).
The ACCC is an improved technology that has twice the capacity of the ACSRs and can easily be retrofitted on the existing lines, eliminating the hurdles of dismantling current cables to lay new ones, experts say.
But the modality being adopted for the award of the contract appears a contravention of federal laws on award of contracts which require open advertisement and competitive bidding for government jobs and supplies.
Under Nigerian Public Procurement Act (PPA), the $800 million contract should go through open competitive bidding.
The Act, enacted in 2007, prescribes principles by which public procurement entities within the various Ministries, Departments and Agencies should conduct their affairs. The principles, which include honesty, integrity, transparency, accountability, fair competition, economy and efficiency and value for money, apply to all transactions, large or small, and describe the behaviour expected of every public officer in the conduct of public procurement. The spirit of the Act is to offer all interested contractors, suppliers and consultants a level playing field on which to compete and thereby, directly expand the purchaser’s options and opportunities.
It is also to serve as a key deterrent to collusion and corruption, submission of inflated or deflated tenders, followed by delayed or defective performance. The law also frowns at procurement officials betraying and abusing public trust for personal gain.
Officials said the TCN and the power ministry cannot hide under the restricted tendering provisions under Section 40 of the Procurement Act to award the contract to the American firm because CTC Global is not the only producer or supplier of Aluminium Conductor Composite Core Conductors in the world.
Section 40 of the Act says: “Subject to the approval by the Bureau, a procuring entity may for reasons of economy and efficiency engage in procurement by means of restricted tendering if : (a) the goods, works or services are available only from a limited number of suppliers or contractors ; (b) the time and cost required to examine and evaluate a large number of tenders is disproportionate to the value of the goods, works or services to be procured ; or (c) the procedure is used as an exception rather than norm…”
Apart from its legal implications, taxpayers stand to lose billions of naira should the deal proceed in its current form, some officials said.
Insiders: Contract to be funded from $30 billion loan
Some Officials familiar with the matter told PREMIUM TIMES that the government might pay an additional 25 per cent of the contract sum to CTC Global before installation, bringing the total project sum to $1 billion.
The $800 million is the estimated cost for the supply of the conductors only.
The deal is expected to be funded from the $30 billion loan being sought by President Buhari.
Insiders said that was one of the reasons the president failed to provide details of how the loan would be spent and repaid when he sent a request for its approval to the National Assembly.
Officials at the power ministry said the $1 billion proposed for the project could fund 2,000MW of clean coal power plant.
“This will be in addition to about four million tonnes of coal energy that could be generated out of which two million could be exported for much-needed foreign exchange,” one official said.
There are also questions about why President Buhari wants to spend heavily on transmission when several power plants built by his predecessors — especially the ones built by President Olusegun Obasanjo — are deteriorating due to their idleness.
The $1 billion, they said, could be channelled towards production of gas to power existing power plants for improved output for the country.
The revamping of the transmission lines can be done in phases, rather than sinking $1 billion in a lump sum when there is no energy to transmit, the officials said.
The insiders also said Manitoba Hydro, a Canadian energy company that ran the Transmission Company of Nigeria for a while, had in the past scrutinised the proposed project and rejected it.
The transmission lines upgrade contract, they said, was turned down by Manitoba because it had no proof of concept.
A proof of concept serves as guide for government officials working on awarding contracts.
Since there is little proof to show that it had worked before, chances are that the $800 million could end up not achieving its purpose, one concerned official said.
CTC Global and previous government contracts
This is not the first time the company would be handed contract without compliance with Nigeria’s procurement laws.
In March 2012, CTC Global got a N3.2 billion contract for the re-conductoring of Onitsha-Alaoji 330KV power transmission line.
There was also no competitive bidding as required by Nigeria’s procurement law.
The equipment supplied by CTC Global for that project was abandoned at the ports for years.
In 2016, the government had to budget N2.4 billion to pay demurrage and other avoidable charges before clearing the supplies.
TCN, CTC Global elusive
The main actors involved in the ongoing negotiations for the deal rebuffed PREMIUM TIMES’ efforts to get them to comment for this story.
Seun Olagunju, the spokesperson for the TCN, asked for more time for her to gather information on the contract.
She said she would get back to us after the Christmas and Boxing Day holidays.
She is yet to do so. And several calls and text messages to her telephone were neither answered nor returned.
Carl Ulrich, the Senior Vice President in charge of international business development at CTC Global, sent a response which did not answer the questions posed to him.
He responded to our questions by explaining the benefits of the project.
When reminded that the enquiries were specifically about the special consideration his company was being granted and its possible violation of Nigerian laws, Mr. Ulrich failed to respond for three days.
Questions about why past supplies by CTC Global were abandoned at the port for years were also not responded to.